Natural Hair is Big Business For Black Entrepreneurs

A lucrative industry for a new generation of hair care product suppliers

CURLS LLC Founder Mahisha Dellinger

Black hair has long been a lucrative business in the United States for black entrepreneurs, from Madam C. J. Walker, the first female American self-made millionaire, to former BE 100s companies such as Johnson Products, SoftSheen, and Pro-line. These companies created a market, opening the door for a score of black entrepreneurs who dominated the ranks of the nation’s largest black-owned businesses in the 1970s and ’80s.

Major corporations such as L’Oréal and Alberto-Culver also realized the value of this lucrative niche, and made inroads into the market in the 1990s by using their financial and distribution muscle. The black firms fought back through such organizations as the American Health & Beauty Aids Institute and placed a “Proud Lady” logo on brands produced by black-owned firms as a means of increasing support among African American consumers. However, the black firms did not have the resources to compete with the monoliths and were eventually acquired by these firms and turned into divisions of the majority corporations.

Today, most hair products for black consumers are no longer produced by black-owned companies–except for those in a new and growing area. Increasingly the sweet spot is natural hair products; notably, sales of relaxers have tumbled 30% between 2010 and 2012. The “pie” is the black haircare market which, according to the market research firm Mintel, is worth $684 million.

Unlike trends of any previous generation of business owners, social media has played a significant role in accelerating the growth of natural haircare. But will this new group of entrepreneurs be able to hold onto the business, particularly when an increasing number of companies, such as Sally Beauty Supply, are realizing the financial potential?

When Mahisha Dellinger ditched her relaxer to wear her hair natural a decade ago, there weren’t many products on the market designed to care for her textured hair. “The drying gels and hair sprays were not for me. Neither were the Jheri curl juice, perms, or relaxers,” she recalls. So she went online and found product recipes to make at home. As she experimented with homemade styling solutions, “I saw that other women were starting to embrace their natural hair,” the 39-year-old says.

Unlike in the 1970s, however, when black women wore afros as a political statement, “this movement was more emotionally driven,” Dellinger says. “It’s like, ‘I’m embracing who I am and I’m going to rock my natural curls, my locks, or my afro.’” Dellinger found the movement personally liberating, and she saw a business opportunity in it. “I needed options, and I knew others did too.”

In 2002, Dellinger, then a marketing manager for Intel, started CURLS L.L.C. Over the next couple of years, she invested about $30,000 of her personal savings to hire a cosmetic chemist, develop initial products, and set up an online storefront. “It was very grassroots,” says Dellinger, who peddled her products to local salon owners who agreed to sell them in their stores.

By the end of that first year, CURLS had earned $86,000 in revenues. Dellinger continued to work with salons and grow her online following, and the company made $360,000 the second year and $600,000 in 2004. Then, in 2010, CURLS scored its first major distribution deal when Target invited Dellinger to pitch her products. “It was literally three minutes into our presentation, and [the buyer] said, ‘I love it,’” Dellinger recalls. That was soon followed by deals to carry CURLS products in other stores such as CVS and Rite Aid; Walmart will carry the products starting this year. Today, the business that started in Dellinger’s kitchen employs 10 people and boasts 2012 revenues of more than $10 million.

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